San Francisco-headquartered Wells Fargo & Company (WFC), founded in 1852, is a diversified financial service holding company with a market cap of $215.8 billion. It operates in four segments: Consumer Banking and Lending; Commercial Banking; Corporate and Investment Banking; and Wealth and Investment Management, offering various financial services like lending, banking, capital markets, wealth management, and advisory services in the U.S. and internationally.
Shares of the financial services company have outperformed the broader market over the last year. WFC has gained 61.7% over this time frame, while the broader S&P 500 Index ($SPX) has rallied nearly 26.2%. Also, in 2024, Wells Fargo stock rose 25.7%, surpassing SPX's 9.5% rise on a YTD basis.
Zooming in further, WFC's outperformance over the past 52 weeks also looks impressive in comparison to the S&P 500 Financials Sector SPDR's (XLF) 30.4% returns. Moreover, the stock's YTD gains outshine the exchange-traded fund's 11.3% returns over the same time frame.
Over the past year, Wells Fargo faced economic turbulence with higher interest rates impacting net interest income, a crucial metric of bank earnings from loans. Yet, on February 15, Wells Fargo's share prices rose 7.2% as federal regulators eased oversight on the bank's sales practices, acknowledging improvements in risk management since the 2016 fake accounts scandal.
Most recently, there was a temporary decline in share value despite the company's top and bottom lines exceeding analyst expectations in Q1 earnings results on April 12. Profits declined year over year due to reduced loans and regulatory shifts. However, shares rebounded in the subsequent trading session as analysts and investors reacted positively to the earnings report, buoyed by the bank's disclosure of a $6.1 billion stock repurchase.
For the current fiscal year, ending in December, analysts expect WFC's EPS to decline 1.7% year over year to $5.08 on a diluted basis. The company's earnings surprise history is robust. It beat the consensus estimate in all the last four quarters.
In the last reported quarter, the company's revenue grew marginally, beating the revenue estimates by roughly 3.5%. Its EPS, despite declining by 2.4% annually, surpassed Wall Street’s estimates by 9.9%.
The consensus view on WFC has been bullish overall. Among the 26 analysts covering the stock, the consensus rating is a “Moderate Buy.” That’s based on 12 “Strong Buy” ratings and 14 “Hold.”
This configuration is slightly more bullish than a month ago, with 11 analysts suggesting a "Strong Buy."
On May 1, JP Morgan analyst Vivek Juneja increased the price target of Wells Fargo stock from $59 to $61.50 and maintained a “Neutral” rating. However, on April 15, Argus Research maintained a "Buy" rating on the stock and lifted its price target from $57 to $66, which implies a 6.6% upside potential.
Even though the WFC stock trades at a premium to the mean price target of $60.03, the Street-high price target of $70 suggests an upside potential of 13.1% from the stock's current price levels.
On the date of publication, Sristi Jayaswal did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
